Seizing Opportunities: Distressed CRE Assets Spark Investor Action

As predicted, the CRE landscape is experiencing a surge in distressed assets, prompting nationwide investor strategies. With forecasts of a challenging refinancing environment and a substantial “wall of debt,” industry leaders anticipated a wave of distressed properties hitting the market in 2024. Now, in the second quarter of the year, this foresight is translating into real-time opportunities for investment firms across the U.S.

Key Developments:

  • Notable among these moves is Starwood’s “Distressed Opportunity Fund XIII,” targeting a staggering USD10 billion across diverse asset classes, including hospitality, industrial, office, and more, with a significant allocation for data centers.
  • Lone Star’s new real estate fund focuses on asset classes with “long term structural demand interrupted by short term factors,” such as retail and senior housing, emphasizing adaptive strategies to capitalize on market fluctuations.
  • Lightstone’s USD500 million platform and the RXR Realty and Ares Management joint venture announce significant funds targeting distressed CRE assets, indicating a growing appetite for strategic investments.

Continuing Trends:

  • The momentum observed in the preceding year continues, with many owners under pressure to sell at discounted prices due to rising rates and challenges in securing refinancing.
  • Struggling regional banks and high-interest rates contribute to the availability of distressed assets, presenting compelling opportunities for investors.

Anticipated Impact:

  • Despite proactive steps, a significant reservoir of untapped capital, known as “dry powder,” is poised to enter CRE markets, leading to a dynamic landscape characterized by value-add and opportunistic investments in distressed assets.


  • As the CRE market navigates through distressed asset dynamics, stakeholders must remain vigilant, ready to capitalize on emerging opportunities. The convergence of strategic fund deployments and the influx of capital underscores the industry’s resilience and adaptability in seizing value-driven prospects.